The Enterprise System Spectator

Tuesday, February 23, 2010

Victory in court for open source software

My friend Jeff Gordon, an expert on software licensing, alerted me to an important decision that came down today, greatly strengthening the legal basis for open source software licenses. The case, which I've been following for some time, was filed by one Robert Jacobson, who manages an open source project for model railroad enthusiasts, claiming copyright infringement for use of his code in a competing product.

I first wrote about this case in 2008, when a lower court ruled that the license in question was "intentionally broad" and therefore could not be used as the basis for copyright infringement. The U.S. Court of Appeals, however, overruled the lower court and "determined that the terms of the Artistic License are enforceable copyright conditions."

Violation of an open source software license constitutes copyright infringement, not just breach of contract (this was first upheld by the Federal Appeals Court in 2008 in this case).

Use of open source code without attribution is a violation of the Digital Millennium Copyright Act.

These violations entitle the Plaintiff (Jacobson) to monetary damages – which, as they’re based on violations of copyright law, are potentially much more substantial than those which may have been limited by contract law.

My takeFor open source enterprise applications to compete successfully with proprietary software vendors they need investors to fund their efforts. But potential investors need the assurance that the work they fund will be protected from IP theft. This case gives real teeth for enforcement of open source license terms and conditions, which should encourage investors to be more willing to fund such efforts.

Thursday, February 18, 2010

SAP pushes back on Gartner for its ranking of Business Objects

SAP is complaining about Gartner's latest Magic Quadrant, which shows its Business Objects product line ranked way down the line for "ability to execute," behind Oracle, Microsoft, IBM, SAS, and Microstrategy.

When vendors make it into the top-right "leaders" quadrant of a Gartner Magic Quadrant (MQ) report, they generally don't complain. But SAP isn't thrilled with the "ability to execute" positioning of SAP BusinessObjects in the 2010 Gartner MQ for Business Intelligence Platforms, which was released early this week.

"If you look at the results, it's nonintuitive and nonsensical that we would have less ability to execute, than, for example, Microstrategy," said Franz Aman, SAP's vice president, intelligence platform product marketing.

Gartner's criteria for evaluation are almost certainly going to be different from the criteria of a specific buyer.

MQs measure things not of interest to buyers. For example, as a buyer, is "completeness of vision" really one of the two primary criteria in evaluation? How about fit to my functional requirements and industry?

MQs often leave out vendor that a specific buyer ought to be considering, as Gartner typically only evaluates vendors above a certain size threshold. The MQs by definition favor established, even legacy, vendors.

Vendors use MQs in their sales presentations, if their position is favorable, without noting all the caveats that Gartner includes. First-time buyers, especially in small or midsize companies, may not understand the misuse of MQs in this way.

But this MQ calls out specific problems with SAPHaving said that, I think SAP is asking for trouble in bringing attention in particular to this MQ, because Gartner had specific reasons according to its criteria for ranking SAP as it did in terms of "ability to execute." The reasons? SAP's problems after its acquisition of Business Objects in transitioning support to its own support systems as well as apparent issues with how it is dealing with acquired customers.

For the third year in a row, customer survey data shows that customer support ratings for SAP are lower than for any other vendor in our customer survey. Overall customer experience scores that include support, sales experience and software quality are also at the lowest levels. These results are not unusual in the aftermath of an acquisition. To address these challenges, SAP has put in place programs to address customer issues with support and to address, more broadly, the customer experience.

Gartner points out, however, that SAP is not alone in problems stemming from an acquisition of a BI player. Oracle had some of the same problems with its acquisition of Hyperion, while IBM with its acquisition of Cognos is currently in the same boat as SAP:

Customer turmoil from acquisitions typically follows a life cycle. Initially, there is significant customer concern because of uncertainty about product road maps and commitment. This is followed by the actual execution of the acquisition transition in which support, contracting, pricing, sales territory alignments and products are often changed. This transition process takes time and is not easy on customers. Successful acquisitions at some point complete the transition and reach a new "normal" for customers.While Oracle, which acquired Siebel and Hyperion in 2005 and 2007 respectively, seems to be successfully exiting the back of this curve, as shown by significantly improved Magic Quadrant customer survey results this year over last, weak customer survey results for IBM and SAP suggest that they are still in the throes of this transition. This heightened level of customer dissatisfaction revealed in the customer survey is reflected in these vendors' Ability to Execute positions.

On a side note, it appears that SAP may be attempting to squeeze additional revenues from some of the Business Objects customers that it acquired, leading to client dissatisfaction. This also affected Gartner's ranking of SAP's ability to execute:

Usage terms, not previously defined in older contracts for virtualized deployments, have led to confrontational experiences with SAP for some Business Objects customers. In the middle of 2009, SAP added virtualization definition and a migration path to new contracts. Installed base customers with old contracts could still be subject to additional fees from an audit.

The problems are confirmed by postings on the Business Objects Board (not affiliated with Business Objects or SAP). As of this writing, there are seven pages of posts, showing a complete lack of coordination for the migration of support. It sounds like a deadline-date-driven migration for which SAP was not prepared.

This is not the first trouble SAP has had in its relationships with Business Objects customers. Things got so bad earlier this year that Business Objects emailed its customers to apologize for "issues related to poor service including delayed deliveries of the company’s technology."

If SAP is going to make major strategic acquisitions in the future, it is going to have to learn how to make them painless for customers.

Bottom lineThe fact that Business Objects customers are still having support problems--two years after they found themselves in SAP's customer base--suggests that SAP should spend less time trying to disprove Gartner's findings and more time getting its own support systems and processes in order.

Monday, February 15, 2010

IT workers seeing meager 1.8% pay raise in 2010

Over at Computer Economics, we've just released our new 2010 IT Salary Report. Bottom line: salaries at the median are increasing but not by much:

During two years of turmoil, the great recession of 2008-2009 brought budget cutting and layoffs across most IT organizations, large and small. But the picture is brightening for IT workers, and our 2010 IT Salary Reportfinds that IT organizations are budgeting to give the typical IT worker a 1.8% boost in pay.

By historical standards, the 1.8% median pay raise is meager....But in light of still-high unemployment rates, the finding indicates IT executives are responding to the need to retain their best workers and boost damaged morale.

The first chapter goes on to describe pay raises by job classification. Interestingly, workers at the bottom rungs are actually getting higher pay raises than IT executives and managers this year.

The full study provides 2010 total compensation ranges for 70 specific IT job positions in 73 U.S. metropolitan areas. Salary ranges are further broken down by organizational size for each job position within each metropolitan area. To aid in analysis, all salary statistics are provided at the 25th percentile, median, and 75th percentile.

Oracle shuts down free support blog

Dennis Howlett called my attention to a recent action by Oracle to shut down a free support blog run by one of its senior support people. Chris Warticki’s Oracle Support Blog (See Feb. 24 Update at bottom of this post), was hosted by Oracle but completely under the editorial control of its author.

Leaving no doubt that it was Oracle that took action to shut down his blog, Warticki subsequently wrote on Twitter, "Sorry...I'm not allowed to represent Oracle Support through social media."

Chris took an awful lot of flack last year when the new flash-based My Oracle Support was launched. He did his best to soothe tempers, and from what I saw – as a grunt on the ground just using the product – was the only real person from Oracle actually communicating with the Community. Everything else that Oracle put out was empty-worded platitudes and patronisations that did nothing to address people’s real anger and frustration at what was clearly a Challenged implementation.

I remember at the time being impressed that someone from within the organisation was prepared to put their head above the parapet and actually try to work with people experiencing problems. The rest of the communications that I saw from Oracle appeared equivalent to a five-year old putting their fingers in their ears and shouting "na na na na i can’t hear you there’s no problem na na na na"

The final straw however, apparently occurred last week, when Oracle's new support site, "My Oracle Support" went down. As RNM comments,

How can an Oracle blogger post something that acknowledges that My Oracle Support is fallible? That a system that people pay a lot of money to use is not only dog-slow because of an awful flash-interface, but that it's actually UNAVAILABLE?

In addition, his blog's comments section gave a platform to a lot of people raising grievances about Oracle's support platform, and maybe that disturbed the corporate PR monster too. No adverse comments equals no problem, right?

My takeOracle needs to realize this is not 1999, or even 2005. Customers have ways of communicating about problems, whether Oracle likes it or not. Better to participate in the conversation and have an opportunity to shape it than try to stymie it. In fact, attempts to stifle the dialog only gives such problems more visibility.

For example, I wouldn't have even known about problems with My Oracle Support had Oracle not shut down Warticki's blog. But now, here I am writing about it, and this post will soon go out to my 1,300+ email list, many of which are Oracle customers and partners.

The larger issue, however, is what this says about Oracle's ability to support all the customers that are coming on board due to its acquisition program. Thousands are about to be added from its acquisition of Sun Microsystems. Only last week, Oracle was boasting that, in a few weeks, Sun customers were about to experience the highest level of customer service in the industry, when Oracle migrates them to its own support systems. The problems with My Oracle Support couldn't have come at a worse time.

Oracle isn't the only major enterprise software vendor that's had problems with support. For example, in 2008 I wrote about the huge problems SAP had in transitioning support for Business Objects. Read the many comments triggered by that post: it appears those problems continued for many months. The issue is not that there are problems, it's how the vendor deals with them.

Update, Feb. 19: A source tells me that the Oracle support site, My Oracle Support is/was down again and that Oracle users are none-too-happy. My source says that he's heard quite a few comments regarding "that frickin' Flash interface."

Update, Feb. 24: A comment on this post from RNM alerted me to Oracle's reinstating Warticki's support blog, with its historical posts. In addition, Warticki is now back online with Twitter. However, it appears as if any new postings from Warticki will just point to his writing behind the password-wall on Oracle Communities. Read RNM's post and understand that Oracle has still not figured out how to engage online with customers.

In this respect, with its SAP Developer Network (SDN), SAP appears miles ahead of Oracle.

Update, Mar. 25: Well, just checked and Chris has not updated his support blog for over a month, so he must be spending all his time behind the firewall on My Oracle Support Community. The historical posts are still up on Chris's original blog, however.

Thursday, February 11, 2010

Not a good week for SAP

There are more management changes in Waldorf, with SAP announcing more changes to its executive board. But the big disappointment is the resignation of John Schwarz, former CEO of Business Objects, which SAP acquired in 2007.

Why is he leaving? Most likely because he didn't get the CEO job, which went to Bill McDermott, head of the field operations, and Jim Hagemann Snabe, head of product development, who will now share the top job.

The loss of Schwarz is a body blow to SAP for at least three reasons:

First, Schwarz was slated to run product management for SAP which is in desperate need of strengthening. Confusion over the role of SAP's new Business ByDesign is just one example.

Second, as the former head of Business Objects, his resignation has to be a discouragement for the top Business Objects people, who SAP needs to keep, as business intelligence is one of the few bright spots for new sales in SAP’s portfolio right now.

Finally, Schwarz was a test case for whether an outsider could survive in the top ranks of SAP management. His departure has to be seen as a failure for SAP to accommodate someone without a long tenure within SAP at that level.

Dennis Moore has a good write-up on these latest management changes at SAP.

Update: Forrester's Paul Hamerman thinks SAP needs to follow through on its intent to "changing its meandering direction." He writes, "Failure to do so will result in a loss in market value and eventual acquisition."

Monday, February 08, 2010

SAP top management changes: impact on maintenance fees?

SAP pulled a surprise change in its leadership team over the weekend, with Léo Apotheker out as CEO and replaced by Bill McDermott, head of the field operations, and Jim Hagemann Snabe, head of product development, who will now share the top job. At the same time, SAP elevated Vishal Sika, chief technology officer (CTO) to the SAP Executive Board.

Analyts and bloggers have been buzzing about the news for several reasons, not least of which is the fact that SAP announced the switch in a press release over the weekend, following up with a somewhat terse conference call this morning by co-founder and chairman Hasso Plattner.

Joab Jackson and Chris Kanaracus have an excellent write up at Computerworld, including some contents from an internal email from Apotheker to SAP employees. In it he refers to the results of a recent SAP employee survey, which found a dramatic loss of confidence in senior management, according to a Financial Times report.

In the conference call this morning, Plattner sounded a humble note on SAP's unilateral decision to increase its software maintenance fees, in the midst of a recession. As reported by Computerworld:

He addressed head-on one of the most heated issues in SAP's recent history: Its 2008 decision to move customers to a richer-featured but more expensive Enterprise Support service. The plan rankled users worldwide, particularly those with older, stable systems and little need or desire for additional support.

"I was part of the decision that we had to raise maintenance fees," he said. "That is not something we can put in Léo's shoes. This was done by SAP. We made a mistake and we have to change course here, and regain trust from the customers who were more than upset. Unfortunately, the head of the company takes the blame, whether it was just or not."

Implications for SAP maintenance fees
I normally do not pay a lot of attention to management changes at software companies, as I find them to be more of interest to insiders and financial analysts. But I've been convinced by a couple of my fellow Enterprise Advocates that this switch matters because of what it means to customers.

If the issue of the maintenance price-hike is one of the main issues behind Apotheker's departure, what does it mean for maintenance fees? Last month, SAP appeared to be backing off its decision to unilaterally migrate all customers from Standard Support (typically at 18% of license fees per year) to the more expensive Enterprise Support (at 22%). But a more careful analysis by David Dobrin revealed that SAP's apparent reversal was no reversal at all: in fact, by invoking cost-of-living clauses in many of its customer contracts, SAP might actually be raising fees for Standard Support above 22%!

So, if Plattner is now expressing humility on the maintenance fee issue, does that mean SAP might be backing off its enforcement of cost-of-living increases? One can only hope so. After this morning's conference call, it's hard to imagine SAP's sales force turning around and playing tough guy with cost-of-living increases.

Other voices
Fellow Enterprise Advocate Dennis Howlett, who reads SAP tea leaves more closely than I, has been all over the story. He reports on SAP's need to rebuild trust with customers. At the same time, he feels now is the time for SAP to beef up its technology with some targeted acquisitions of firms such as Software AG and TIBCO.

Vinnie Mirchandani views the leadership change at SAP as not addressing the real issue of the total cost of ownership for SAP and its ecosystem partners. He writes:, "Bill McDermott and Jim Snabe, the new co-CEOs are good solid, likable executives – but they represent more of the same."

Update, Feb 9: Bob Evans has a very good piece in InformationWeek on SAP's failure to put its customers front and center, including this zinger (emphasis, mine):

I think it helps to paint a picture of a company that is dangerously out of touch with what its customers do and want and need, and with how those customers rate and reward IT vendors in these days where it's essential to do a great deal more with a whole lot less.

Speaking in broad strokes about trust and the need to rebuild it, Plattner said this: "What SAP has to re-establish is that we have trust between all involved parties: the [SAP] Supervisory Board, [SAP] Executive Board, the co-CEOs, the management team, the employees, the works council, the partners, the customers, and the employees working for our customers." Setting aside that bizarre customer/customer-employee split, look at where customers rank in the great chain of being constructed by Plattner: dead last. Almost an afterthought. What good does it do SAP to have gushers of harmonic convergence among its own employees if the company's customers feel alienated, unfairly treated, and unwilling to trust anything SAP says? I just don't get that—again it's a degree of tone-deafness that is hard to fathom.

I'm interested in hearing about best practices, lessons learned, horror stories, and case studies of success or failure.

Selecting a new enterprise system can be a difficult decision.
My consulting firm, Strativa, offers assistance that is independent and unbiased.
For information on how we can help your organization make and carry out these decisions, write to me.

My IT research firm, Computer Economics provides metrics for IT management, such as IT spending and staffing benchmarks, ROI/TCO studies, outsourcing statistics, and more.